The share price of Australian residential developer Devine Limited (ASX: DVN) has skyrocketed on a takeover bid from CIMIC Group Ltd (ASX: CIM) this morning.
At the time of writing, the Devine share price is 98.8% higher to 23.5 cents a share. However, shares had been trading as high as 25 cents per share earlier in the day.
CIMIC acquisition dazzles Devine share price
Investors have been gobbling up shares in Devine after the residential community and apartment construction company received a takeover bid from construction giant CIMIC.
According to the release, CIMIC already held a 59.11% interest in the company. However, today’s offer is to acquire all the remaining shares for 24 cents per share.
Based on the current number of issued shares, the total outlay will amount to $15.6 million. This amount will be funded through the construction group’s available cash on hand or existing debt facilities.
The offer, made through CIMIC Residential Investments (CRI), is at a 100% premium to yesterday’s closing price.
Additionally, the offer remains conditional on CRI receiving a minimum of 75% of valid acceptances for the non-associated shares. Secondly, CRI must be holding at least a 90% relevant interest by the end of the offer period.
Devine’s next steps on skyrocketing share
The Devine directors will evaluate the proposed offer and will provide additional details in due course.
Firstly, the Australian residential construction company will engage an independent expert to determine whether the off-market transaction would be in the best interest of shareholders.
Meanwhile, the recommendation from Devine directors is for shareholders to take no action.
CIMIC and Devine recap
Interestingly, the Devine share price had been outperforming CIMIC even prior to today’s announcement. The small-cap had returned a gain of 33% in the last 12 months prior to today. In contrast, CIMIC shareholders have been nursing a 10% loss over the same period.
Although, there may not be any correlation — the takeover bid comes only a day after CIMIC was awarded a design and construct contract to build the M6 Motorway in Sydney. That announcement failed to inspire the CIMIC share price, with it falling 1.3% for the day.
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The post CIMIC (ASX:CIM) takeover offer sends Devine (ASX:DVN) share price soaring appeared first on The Motley Fool Australia.
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